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Your kids may be picking up math concepts in class, but it&rsquo;s a smart idea to talk to them about money &ndash; and especially the importance of saving &ndash; at home, starting when they&rsquo;re young. &ldquo;Early financial decisions can have lifelong consequences, from mounting debt and poor credit scores to an inability to cover basic needs,&rdquo; says Lizabeth Wagger, manager of volunteer engagement for Junior Achievement of Greater Washington. Giving kids the tools to manage their money helps them avoid economic insecurity and positions them to achieve financial wellbeing instead. Try these tips tailored to each age range.
<h2>4- to 7-year-olds</h2>
Focus on: distinguishing needs and wants; exchanging allowance for action.
Parents may think preschool to kindergarten is too early to discuss finances, but your children are already learning some of the important basics like wants vs. needs.
"My wife and I have lived by the philosophy that the earlier you speak with your kids about money, the better," says Andy Hill, host of the Marriage, Kids and Money podcast. "Knowing that financial habits are formed by age 7, we were teaching smart money lessons to our kids by age 4." Hill and his wife used the grocery store and other shopping experiences to illustrate the difference between needs and wants. ("We need clothes, water and food, but we don't need a pack of trading cards, even though they might be awesome," quips Hill.)&nbsp;&nbsp;
&ldquo;When experts say financial habits are formed by age 7, they&rsquo;re referring to the critical period during which children begin to absorb and mimic the financial behaviors they observe in their surroundings, primarily from parents and caregivers,&rdquo; says James Horne, president and CEO of Junior Achievement of New Jersey. &ldquo;Children learn through observation and imitation. An example would be if a child observes a parent putting money in a coin bank for saving, it is more likely the child will want to save as well.&rdquo;
Kids this age can also contextualize doing an action (such as a chore) in exchange for money, as well as exchanging money for something they want &ndash; or to help others. As his children earn their allowances, Hill has them save 10% and set aside another 10% aside into Give Jars. Then, once a quarter, each child donates their Give Jar money to a charity of their choosing and Hill and his wife match the donation. &ldquo;Encouraging kids to save for charity can be achieved by fostering empathy and a sense of responsibility,&rdquo; says Horne. &ldquo;Start by discussing the importance of helping others and the various ways people can contribute, and then recognize and celebrate their efforts to give back.&rdquo;&nbsp;
<img src="https://www.lifeandmoney.citi.com/rcs/v1/media/lifeandmoney/akpublic/storage/retrieveMediaFile/66311fe6cd57e96e91c12de4" alt="BODY_How to Teach Kids about Money &mdash; at Any Age_1135972976.jpg"> &nbsp;
<h2>8- to 10-year-olds</h2>
Focus on: entrepreneurial thinking and allowing the child to make decisions.
It&rsquo;s important to figure out what motivates your child and marry those motivations to earning, saving and spending.
&ldquo;From an early age, my girls learned about savings because they had to save up for extra items they wanted,&rdquo; says Melody Bell, CEO and founder of Financial Beginnings, a nonprofit that teaches people about financial well-being. She encouraged her daughters to engage in entrepreneurial endeavors such as a lemonade stand or babysitting to earn extra money for things they wanted to purchase on their own.
You can have your child set savings goals by listing a few items they want to buy that are under $10, suggests Jayne A. Pearl, co-author of Kids, Wealth and Consequences: Ensuring a Responsible Financial Future for the Next Generation. This creates an opportunity to discuss savings strategies with your child and help them evaluate how long it will take to reach a goal.
Pearl also suggests contextualizing the household budget. When her son was 8, she sat him down and listed out the family&rsquo;s monthly expenses.
&ldquo;I assured him I earned enough to cover expenses, but sometimes an appliance or the car breaks,&rdquo; says Pearl. &ldquo;And while I try to save for those things, a really big sudden expense can be stressful and even set me back.&rdquo; This way, he starts to understand &ldquo;why sometimes when he asks me for things, I might say it&rsquo;s not in the budget.&rdquo;
<img src="https://www.lifeandmoney.citi.com/rcs/v1/media/lifeandmoney/akpublic/storage/retrieveMediaFile/66311faecd57e96e91c12de1" alt="BODY_How to Teach Kids about Money &mdash; at Any Age_1141999394.jpg"> &nbsp;
<h2>11- to 14-year-olds</h2>
Focus on: banking and bills &mdash; give some financial autonomy in banking and purchasing decisions.
As your kids turn into tweens and teens, it's a good time to offer up some autonomy over their finances. Pearl suggests starting with a trip to the bank to open a savings account for the child. You can even offer a parental-matching program and match what they save for certain purchases. "Giving your kids the responsibility to pay for a certain bill or expense in their life, like clothes, can help them understand how money works," says Hill. "When you run out of it, you can't buy things you want or need."
Allowance or money earned from entrepreneurial ventures can also be used to make those purchases. And don't be afraid to let your kid make a decision that you know isn't going to end well, such as using those savings for a pricy sweatshirt they&rsquo;ll quickly grow out of. "Failure is okay here," says Hill. "Better for him to fail with $50 of clothing money at 12 years old than $5,000 when he's 22."
Pearl, too, advises using your mistakes as teachable moments. "For instance, losing a receipt and then needing to return an item," says Pearl, &ldquo;or impulse purchases such as buying things you don't need just because they were on sale." These money mishaps can also be used to teach teens much-needed information, like how interest works on a credit card and how to pay off a revolving balance.&nbsp;
&ldquo;You can say something like, &lsquo;When you use a credit card to buy something, the bank lends you the money. But if you don&rsquo;t pay back all of what you borrowed by the due date, they charge you extra money called interest. It&rsquo;s like paying a fee for borrowing their money,&rdquo; says Kat Delgado Kirkwood, chief impact officer for Junior Achievement of Southern California. &ldquo;The longer you take to pay it back, the more interest you&rsquo;ll owe. So, it&rsquo;s important to pay off your credit card balance in full each month to avoid paying extra.&rdquo;
<h2>15- to 18-year-olds</h2>
Focus on: requiring your child to earn their own money and make spending decisions.
Many parents start transitioning out of the role of financial benefactor in their child&rsquo;s late teens so this stage is a good time to start preparing them to strike out on their own. &ldquo;You want to go out on a date? You pay for it,&rdquo; says Gregg Murset, a certified financial planner and CEO of the financial literacy app BusyKid. &ldquo;You want to take a long drive? You put gas in the car.&rdquo; This isn&rsquo;t to suggest you pull all financial support, but rather that you allow your child more autonomy when it comes to money. It&rsquo;s also helpful to allow them to make mistakes, like spending on trendy clothes they&rsquo;ll outgrow quickly or a gadget they'll quickly lose interest in.
&ldquo;When financial conversations are an ongoing part of family life, you can discuss what went wrong, what went right, what can be learned from the experience and how to adjust financial strategies and move forward,&rdquo; says Delgado Kirkwood. Sharing in the celebration of good financial habits, like hitting savings goals, helps everyone build a healthy relationship with money.
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These expert-suggested strategies can help you talk to your kids about money and saving at each developmental stage.